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Gold/Mining/Energy : Strictly: Drilling and oil-field services
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To: bw who wrote (7513)1/10/1998 8:42:00 PM
From: The Perfect Hedge  Read Replies (2) of 95453
 
This from the MF.It makes sense to me.I'm morphing into a bear as I type:

>>I know you are very savvy investor, but please be careful with the oil services stocks. Even though
you and I know that earnings for oil services stocks are not necessarily correlated with the price of
oil, most of the world does not see it that way....and in the stock market -- perception dictates
reality (stock prices).

FWIW, I think the sector is headed lower as the price of oil continues to plummet due to OPEC
quota increases/cheating, the return of Iraqi/Iranian production, a warm winter, and decreased
Asian demand.
IMHO, these stocks will not rebound any time soon.

After the oil sector crash of the 80's, people are just not willing to risk being caught in the same trap
again. I think people invest in oil services stocks for the earnings growth they see coming 2 to 4
quarters out, and right now people aren't seeing such a bright future. This quarter's earnings may be
spectacular, but I think the runup for *this* quarter happened last summer.

Great earnings this quarter for an oil services stock are not the same as great earnings for a
technology stock, because the sector just isn't perceived to have the same infinite growth potential
as technology. Therefore, investors probably won't react much at all to good news. Just MHO.

Best of luck to everyone.

P.S. -- Note that this post was written by a former oil services Perma-Bull. Talk about a change of
sentiment.<<
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